Can market cap be the sole determinant for measur­ing the success of an entre­preneur? Investment bankers and analysts point out that the collective wisdom of the market is a fair measure. But the problem arises when they fail to differentiate the work of an entrepreneur which goes far beyond just building a commercial enterprise. And, we have seen market caps double and double again in just a few years!

While creating wealth is a laudable exercise, it cannot be the be-all and end-all aim of one’s existence – at least not in the view of the septuage­narian, Bhavarlal jain. A true son of the soil, jain’s mete­oric rise from a student strug­gling to read under the only lamp in the village square, to shrugging off a job offer in a government organisation and starting his own small business of peddling kero­sene on a bicycle, is now part of the folklore. The initial risks he had taken in buying a fac­tory put up for auction, and persuading a bank to fund its acquisition are well docu­mented too (see A rich har­vest, Business India, dated 27 July 1987) and the challenges encountered during the empire building process, mis­takes made and lessons learnt (see Apology of no avail, Busi­ness India, dated 29 Decem­ber 1997 and More crop per drop, Business India, dated 26 May 2003). Business India has been following the growth, both of the entrepreneur as well as the group closely over the last four decades.

If one were to apply the investment banker yardstick for measuring growth, jain’s family worth is now roughly a few thousand crore of rupees. But this does not take into account the number of lives of farmers, which Bhau as

Bhavarlal jain is affectionately called, has touched. Or the number of millionaires he has created in the parched region of Jalgaon (which ironically means ‘water-village’). The water conservation activities and the smart usage of water to convert an arid hill into a green park hosting numer­ous demonstrative projects has earned Bhau another epi­thet krishi pandhari. Greatly revered in Jalgaon for putting it on the global map, Bhavaral jain’s achievements should not be measured in money terms alone. His efforts in uplifting the region, through demon­stration farms, improving pro­ductivity and prosperity in agriculture in a dry area and
inculcating innovation in agri­culture and horticulture has to be seen to be believed. The achievements have been rec­ognised by the government of Maharashtra, as also global institutions like UNESCO, ifc and others in the US. No vis­itor to Jalgaon goes away less than totally impressed.

“Strangely enough, I was never interested in earning money for its own sake,” he had stated in one of his inter­views in 1991. “I always cher­ished the thought that one day I would achieve some­thing – something people would remember me by. I never believed in accumulat­ing wealth.”

While the efforts are felt
across crops, his most nota­ble success has been in micro propagation of tis­sues for enhancing bananas and reduction of crop lifecy­cle. The research and conse­quent commercialisation of the tissue culture of banana has benefitted farmers by improving production by over 100 per cent and reduc­ing the harvest cycle by 30 per cent. Sugarcane farm­ers using drip irrigation, have seen their average yield more than double to around 60 tonnes per acre as against the country’s average yield of around 25 tonnes per acre There are select few farm­ers who are even reaping ar yield of 100 tonnes per acre. ‘Water management, water treatment and increasing the area under irrigation’ is the dream of Jain.

Like every entrepreneur, Jain too has made mistakes. But, unlike everyone else he is bold enough to apolo­gise publicly through adver– tisements in the newspaper: admitting his folly of dives: ing into unrelated areas, ja ‘ is now spending a lot of h time in building the nation capital by educating the youth of his region, throug* numerous schools and co-l leges, built through the gen­erous donations, persona and from his company.

More than two decade; back Jain had summed uf the philosophy of his life – “I would like to try and oc everything all over again. LHf is growth. It can stop only ■ the grave.” He has left tm day-to-day administration tj his four sons, who are now grappling with the intricaci* of taking forward the reigrtf of the empire that Bhava* lal Jain built. Their task is ll ensure that the company ■ back on the growth track. J



in 2012-13, the company incurred £ a loss of about ?40 crore in 2013-14. g However, for 2014-15, the company “ has made a strong comeback with a | PAT of about 155.40 crore – an indi­cation of ensuing stability after six-seven quarters of unrest. The company has clocked a revenue of ?6,204 crore, as against ?5,903 crore in 2013-14. Amidst all this, the com­pany has maintained its momentum, growing at a CAGR of about 15 per cent in the last five years.

“Though the company has to face some difficult times recently, it is on course to recovery. The implemen­tation of the cash-and-carry model will entail better operational perfor­mance and lower interest cost thus driving the PAT growth, going ahead. However, debt reduction remains a key monitorable for the stock, even as we maintain ‘BUY’, with a revised tar­get price of 1120 (?101 earlier),” says Manoj Bahety of Edelweiss Securities.

“We expect strong free cash gen­eration over 2015-17E, led by the domestic MIS business, which should aid to reduce the debt-equity,” says Motilal Oswal, in its report on JISL. “We expect growth and margins to recover in 2015-16 on the back of a normal monsoon and lower polymer prices. We maintain ‘BUY’ with a tar­get price of ?100.

“We have successfully been able to implement our new business model, even though we have to face some tough times on account of adverse micro and macro-economic condi­tion,” says Anil Jain, 50, managing director & CEO, JISL. “The efforts have started paying dividends. Our gov­ernment receivables have come down considerably and as the situation sta­bilises in coming months, there will be further improvement, leading to overall look-up in our performance.”

Strategic move

While the company took a bold decision to imple­ment its new business model, in a strategic move it also decided to float an NBFC to meet the funding requirements of farmers who, under the new model, have to pay the company
raised to ?208 crore. After this trans­action, Mandala Capital holds 20 per cent of safl, while jisl’s holding has come down to 49 per cent. Mandala Capital manages a dedicated agri­business private equity fund with a geographical focus on companies based in India. The fund is backed by University of Texas Investment Man­agement Co (UTIMCO) and TIAA-CREF as its anchor investors.

With the fresh capital, SAFL, which currently has a presence in Maha­rashtra, Karnataka and Telengana, is looking to expand its footprint to the neighbouring states of Andhra, Tamil Nadu, Gujarat and Madhya Pradesh in the coming two years. The NBFC is planning to extend finance to over 150,000 farmers over the next five years. “Floating an agri- focussed NBFC is a strategic move on the part of JISL, as it will provide a much-needed cushion to the com­pany by bridging the funding gaps of the farmers. Now, instead of JISL, the NBFC will take the sub­sidy recourse on its book directly,” points out Daven Choksey of K.R. Chok- sey, who strongly believes that there is a big need for focussed NBFCs.

“For IFC, JISL is a strate­gically important partner, whose inclusive business

Revenue by business verticals

FY 2015(%)

model has helped raise incomes for thousands of small farmers, and developed innovative technologies that address the challenges of water conservation and sustainable agri­culture. IFC has been partnering with JISL over a number of years and is a shareholder and lender to the com­pany and an early shareholder in its NBFC subsidiary. During the period of


There is more to JISL than just irrigation. The com­pany, with its diversified offer­ing and services, has emerged as an integrated farm solution provider, which believes in enhancing the overall income of farmers towards creating rural prosperity. The second largest micro-irrigation com­pany in the world makes a wide range of precision irri­gation products suited to var­ious agro-climatic conditions and crops, which also include rice. At jalgaon, the com­pany has a high-tech agricul­ture institute spread over- a sprawling 2,500 acres. The institute, equipped with R&D and technology dem­onstration farms, houses a full-fledged training and extension centre.

The company boasts about

  • agriculture scientists, technologists and technicians who provide various exten­sion services including soil and engineering surveys and agronomic supports to farm­ers and, accordingly, offer


ifc’s investment (2007-14), JISL more than tripled its consolidated reve­nues,” says Prasad Gopalan, man­ager, agribusiness, Asia, IFC, which owns a 2.97 per cent stake in JISL. Mount Kellett Capital, a multi-strat­egy investment firm set up by for­mer Goldman Sachs executives, has bought T349 crore worth of shares in the company, amounting to 7.93 per cent. Other investors in JISL include, among others, Tempelton Funds, Macquarie Bank and Swiss Finance Corporation. Recently, renowned investor Shivanand Mankekar has also reposed his confidence, buying 1.85 per cent stake. At present, the institutional holding in the com­pany is 51 per cent, while the pro­moters own 28.7 per cent.

Over the last three years, the com­pany has also been trying to raise capital through FCCBs, ECBs and other routes, as also boosting its cash flow with its new model, it has now Revenue by geography

FY 2015 (%) also decided to hive off its profit­able agri-processing business, which has grown significantly. In the last five years, the agri-processing busi­ness, now accounting for more than 22 per cent of revenues, has grown at a CAGR of about 25 per cent. “Our agri-processing business has reachec a critical mass and we think it ii the right time to unlock its value

z traceability, JISL helps farmers 5 meet international standards.

° Its own farms are GLOBALGAP- certified. The company has developed with IFC, the Jain gap standards for its farmer suppliers, who supply fruits for processing, which helps the company meet its buy­ers’ concerns without signif­icantly increasing costs for low-income farmers, global- gap is an internationally rec­ognised set of farm standards dedicated to good agricul­tural practices or GAP. Under GLOBALGAP, farmers adopt safe and sustainable farm practices and use prescribed quantity of water, fertilisers, pesticides and other inputs for their produce. JISL trains farm­ers and helps them adapt to :! these norms and get the cer­tification, which helps them sell their produce to global buyers. At present farms of, around 10,000 farmers who are providing mango, banana | and onion to JISL are global- gap certified.

♦ AGl

We are looking for a valuation of around ?2,500 crore and would go in for dilution of minority stake some time during the current fiscal year. This proceed will help bring down our overall debt,” says Manoj Lodha, CFO, JISL. The target is to reduce its debt by about ?1,000 crore in the next two years.

Agri processing

JISL has also emerged as one of the largest agri-processing companies in the country with a significant share in the fruit/vegetable pro­cessing market. The company has three modern fruit processing facil­ities (total capacity: 153,000 tonnes per annum) – one at Jalgaon, Maha­rashtra, and two at Chittoor, Andhra Pradesh. It processes mango, banana, papaya, guava, tomato and pome­granate for the production of purees, concentrates and pulp. In fact, the company is the largest producer of mango pulp, puree and concentrate in the world. It markets these prod­ucts under its brand name Farm Fresh, jisl also produces dehydrated vegetables including onion, garlic, tomato and spinach. In the dehy­drated onion space, the company is India’s largest and world’s third larg­est player (15 per cent market share). It boasts three state-of-the-art dehy­dration plants (total capacity: 40,735 tonnes per annum), one each in Jalg­aon, Vadodara and the US.

The company exports its food products to more than 50 countries and its customers include top global food companies like Coca-Cola, Uni­lever, Nestle, A1 Marai and McCor­mick & Co. JISL is the largest, as also, strategic supplier of mango pulp to Coca-Cola India for its Maaza brand. Both have joined hands in a 50:50 JV project – Unnati, aimed at improv­ing the yield of mango farmers in the country. Launched in 2012, the proj­ect is into its second phase, where

  • farmers will be covered in the states of Andhra Pradesh, Karnat­aka and Tamil Nadu over the next 10 years. In its first phase, 5,000 farm­ers benefited from the Ultra-High Density Plantation (UHDP) tech­nique, which is a proven technol­ogy, commonly practised for mango
    cultivation worldwide and this com­bined with other sustainable agricul­tural techniques, has the potential to increase mango yield more than 200 per cent over the traditional meth­ods. “Our relationship with Jain Irri­gation goes back to 2000, when it started supplying mango pulp to us. Since then, Jain has displayed utmost commitment to this associa­tion by upgrading its capability and infrastructure, besides adding capac­ity proactively. We have partnered JISL in several initiatives, to optimise mango pulp supply chain, which has been beneficial to both the compa­nies,” says T. Krishnakumar, CEO, Hindustan Coca-Cola Beverages Ltd.

JISL is also into contract farming which gives it greater control over the quality and quantity for pro­cessing, compared to traditional procurement channels. JISL, which entered agri-processing in 2002, has used the contract farming model in onion and mango cultivation and plans to expand it to tomato. Cur­rently, 10,000 farmers are involved in its contract farming, where it not only buys back the produce (at a minimum price established at the beginning of the growing season or at around market price at har­vest time, whichever is greater), it also provide the farmers with high- quality seeds, saplings and other
inputs. Most importantly, it helps the farmers with crucial extension services including good farm prac­tices through its network of about 70 associates. Additionally, farmer’s relationship with JISL often allows them to obtain credit from commer­cial banks to fund their inputs.

“Ours is among a few successful contact farming models in the coun­try. Our model is built on selecting progressive, receptive farmers and pro­viding them with high-quality input and services. Most of those involved in our project are small farmers, with an average farm size of less than two hectares,” says Sunil Deshpande, pres­ident, food division, JISL.

Apart from Mis and agri-processing businesses, the company also has its presence in tissue culture, solar water heating systems, solar water pumps, and photovoltaic systems. Currently, it has over 10,000 employees, 3,000 dealers and 27 manufacturing facil­ities, including 15 overseas facilities, spread over five continents. It is also into PVC and PE piping systems as also plastic sheets.

The piping business where it man­ufactures a wide range of thermo­plastic pipes is the second largest contributor to its overall turnover with over 21 per cent share. JISL is the largest manufacturer of thermoplas­tic piping in India with a 15 per cent.

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